Chinese smartphone vendors still rule home market

Huawei, Oppo and vivo maintain winning streak with almost half of the Chinese market under their control

Three smartphone vendors have continued to remain in control of nearly half of China’s smartphone marketshare in the second quarter of 2016, IDC has stated in its latest Quarterly Mobile Phone Tracker.

The top smartphone vendors Huawei, Oppo and vivo cornered 47% of the Chinese smartphone market. Over 2015, the three vendors had a combined marketshare of 43%, while in the first quarter of 2016 that figure rose to 45%.

IDC stated that the figures from 2015 and the first two quarters of 2016 show increasing market consolidation, as the three top Chinese vendors continue to grow their marketshare in the country.

“The success of Huawei, Oppo, and vivo in the market can be attributed to their concerted effort to build their brand and aggressive marketing to attract the consumers, along with the focus on product differentiation,” said Xiaohan Tay, senior market analyst, client devices research, IDC Asia-Pacific.

Huawei led the charge at number one with 19.1 million units shipped in the second quarter, giving it 17.2% marketshare in China, up from 15.6% marketshare in the same quarter 2015.

Oppo is in second place with 18 million shipments and 16.2% marketshare, up from a low 7.6% in the second quarter 2015, giving it 124.1% year over year growth.

vivo in third place shipped 14.7 million devices in China in the second quarter, giving it 13.2% marketshare, up from 7.9% marketshare in the second quarter of 2015, a strong 74.7% year over year growth.

Meanwhile, Xiaomi’s year over year growth was down 38.4%, while Apple was down 31.7% year over year. In fourth and fifth places respectively, Xiaomi shipped 10.5 million devices for 9.5% marketshare in the second quarter 2016, while Apple shipped 8.6 million devices for 7.8% marketshare. These figures are down from 16.1% and 11.9% for Xiaomi and Apple respectively in the second quarter 2015.

The iPhone SE was not a hit in China, where consumers prefer larger screen-sized phones. In the second quarter of 2016, close to 90% of phones shipped in China had screen sizes that were five inches and above. Also, Apple fans are holding out for the new iPhones to be launched in the third quarter, which IDC reckoned could give Apple a boost in China.

Oppo and vivo have continued to excel in the second quarter largely due to the strength of their offline channels, with their shops and advertisements occupying most of the Tier 3 to Tier 5 cities. This is still a more convenient option for consumers living in these cities, as they can easily head to one of the physical shops for after-sale services. In the Tier 1 and 2 cities, they continued their focus on sponsorships of key entertainment shows to win consumers over.

The marketing messages of the top two vendors for the quarter, namely Oppo and Huawei, also focused on one or two key attributes. Oppo promoted its fast-charge technology along with its tag line “charge for 5 minutes to be able to talk on the phone for 2 hours” and focused on camera and selfie features when promoting its latest R9.

Huawei meanwhile focused on promoting P9, making it one of the key products for the quarter. Huawei specifically targeted consumers in search of a good camera in its marketing messages, putting emphasis on its Leica lens and its flatness. The tactic worked and spread like wildfire through WeChat, and helped it to gain consumer interest, IDC noted.

With growth coming mainly from replacement users in China, vendors employed aggressive marketing over the past few months. Oppo hired a few celebrity brand ambassadors to launch its R9 series, prompting other vendors to follow suit; vivo hired a famous Korean star who is popular in China as its brand ambassador, while Xiaomi hired three different ambassadors for its Redmi line.

Recently, Huawei also announced a brand ambassador for its Honor line in China, a departure from its previous marketing messaging, which focused on product features. Most of these ambassadors seem to target the younger crowd. While having brand ambassadors is not a new phenomenon in China, vendors seem to be more aggressive with their marketing strategies. This is seen to be a new tactic for vendors such as Xiaomi that never used to spend on advertising, IDC said.

“In the past, Xiaomi started the trend of selling its phones online and other vendors soon followed suit and created their own online brand. After vendors witnessed Oppo’s success with its R9, they also started riding on the trend of hiring celebrity endorsers to represent their brand and appeal more to the young crowd,” added Tay.

Despite the market being saturated and driven mainly by replacement users, vendors are still aggressive with their marketing tactics, experimenting with new ways to win over consumers.

“Hiring celebrity endorsers may help increase numbers in the short term, but this alone may not be sufficient to drive numbers in the long run. As there is very little differentiation across products to warrant significant brand loyalty, vendors must constantly think out of the box to get people hyped up about their products,” concluded Tay.

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